Pharmaceutical companies shareholders

In product-driven therapeutic research, the pharmaceutical company must satisfy the regulatory and government agencies as well as the prescribers that the new product is effective, safe and meets the qualities required of GMP. The institutions that will pay for the drug -an insurance company or a government health authority - will need to be convinced that the product is good value. In return, the pharmaceutical company may, at some time in the future, recoup sufficient profit to pay the shareholders but also to pay for the development of the product. In the past, pharmaceutical companies... 

Recovery of costs by successful marketing of products is essential in order to maximise shareholder return. As R D costs continue to increase by between 8% and 11% per annum, and sales turnover increases by between 5% and 7% per annum, R D takes up an increasing proportion of the pharmaceutical budget, and for the largest pharmaceutical companies it is about 17% of turnover. 

C) Determine whether the action compromises the profit margin of the pharmaceutical company and therefore is not in the interest of the shareholders if so, the action should be avoided. 

To meet shareholders expectations, U.S. and European pharmaceutical companies typically focus on leveraging products to manipulate their volume, price, and marketing portfolio in ever-changing equations to boost earnings. However, current industry pressures threaten the success of these traditional strategies. 

Notwithstanding this overlapping of interests, physicians and the pharmaceutical industry each have a different emphasis and they focus on different stakeholders. The pharmaceutical companies principal emphasis is the encouragement of the use of their products the physicians primary emphasis is effective patient care. The primary stakeholder in patient care is the patient while the principal stakeholder in industry is the shareholder (Komesaroff and Kerridge 2002). However, the relationship between physicians and the pharmaceutical industry is often more complex, as each party may be influenced by a variety of different interests and stakeholders, e.g., community welfare. 

Selfishness Physicians have a duty to act in the best interests of their patients. Pharmaceutical companies have a duty not only to their shareholders, but also to the community at large. To fulfill their duty to the community, pharmaceutical companies must operate within the confines of socially acceptable behavior or risk loss of reputation, public boycotts, or legislative action. Socially unacceptable behavior by a company can ultimately lead to loss of business and become a failure in its duty to its shareholders. Both the physicians and the pharmaceutical companies or their employees must not compromise these public duties in order to gain financial or other material benefits for themselves, their families or their friends. 

As noted elsewhere in this volume, pharmaceutical companies have slowly come to recognize that they have social responsibilities that must be addressed beyond those associated with R D output. Multinational pharmaceutical corporations have a genuine desire to serve public health needs but are constrained by their obligation to shareholders and other factors. All companies aspire to be good corporate citizens in the communities and countries in which they operate and with the populations in which their products are used. 

Pharmaceutical physicians in large pharmaceutical companies will only very rarely be exposed to the need for press releases concerning their clinical trials. In contrast, the small entrepreneurial pharmaceutical company may live or die on the outcome of a single clinical trial. The rapid dissemination of the results of such a clinical trial to the appropriate audience (shareholders and investment community) is legally required when material to the prospects of a small, public company. The press release then becomes an important tool for publishing clinical trial results. 

The consultant works in the pharmaceutical industry, either as an employee or as an owner or part owner (e.g. shareholder in the pharmaceutical company to be assessed). 

It is understandable that the drug-discovery process leading to a first introduction in humans requires extensive scientific research. In view of economic reality, shareholders and financial analysts look to pharmaceutical companies for large returns on their investments. Each pharmaceutical company 1... 

Lack of economic pressure due to pharmaceutical companies pattern of sustained prosperity and total shareholder return. 

To be successful and competitive, research-based pharmaceutical companies must ensure that new discoveries are frequently brought to the market to generate cash flow. This is required to fund the next generation of compounds to meet the therapeutic needs of patients, and of course, to benefit the shareholders. This cycle of events is sometimes referred to as the product life cycle and is further illustrated in Figure 1.1. 

For new essential medicines it is not acceptable for low-income countries and poor populations to pay the same price as the industriahzed countries. The poor simply cannot be expected to contribute equally to research, marketing, and shareholder returns, especially as it is unhkely that the return will be used for drug research and development for neglected diseases the prices will in any case render these vital items largely inaccessible. During 2000, the endeavour known as Accelerating Access to Care and Treatment , in which UNAIDS and other partners are involved, has stimulated discussions with five pharmaceutical companies to achieve equity or differential pricing of new essential medicines for low-income countries [20]. 

Pharmaceutical companies may also find DM a winner. The difficult future faced by pharma-companies is well known and recognized by most commentators. Pressures from shareholders for profits and dividends, the complexity of modern product development, the costs of research, and the obstacles of managed entry into the system because of NICE (not a purely UK phenomenon, as other countries have or are proposing similar systems indeed, there are world-wide strategies for cost-containment), are just some of the challenges they face. 

The race to find the next blockbuster has never been more important in the pharmaceutical industry. The very existence of many companies may depend on the timely discovery of new chemical entities that can be developed into the next Celebrex or Lipitor . Adding to this is the need to reduce cost and increase shareholder value. Consequently, the productivity of the pharmaceutical industry has dramatically fallen short of its own expectations (1). 

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